Vestel Elektronik Sanayi Ve Ticaret A.S. & Anor v Access Advance LLC & Anor

A claim for a declaration of FRAND licensing terms must be founded on an asserted legal right or other legal standard. The court’s inherent power to grant useful declarations does not create a free-standing FRAND claim.

A FRAND declaration is not a declaration of non-liability for patent infringement merely because accepting a licence would prevent an injunction. Accordingly, without an enforceable right to a licence, such a claim does not fall within the tort jurisdiction under Article 7(2) of the Brussels I Recast Regulation or the service-out gateway for tort claims.

A claim asserting an enforceable right to a licence of UK patents could relate wholly or principally to property within the jurisdiction, even where the FRAND licence would necessarily cover a predominantly foreign portfolio.

The appellants manufactured and sold televisions implementing the H.265 standard. They sought declarations that the respondents’ proposed worldwide licence of standard-essential patents was not FRAND, that their counter-offer was FRAND, or that the court should determine FRAND terms for the UK patents in the pool.

The claim originally alleged abuse of dominance under Article 102 of the Treaty on the Functioning of the European Union and section 18 of the Competition Act 1998. The High Court set aside service out of the jurisdiction and declared that it lacked jurisdiction. On appeal, the appellants abandoned the competition claim and relied instead on patent infringement as the relevant tort and on the court’s inherent declaratory jurisdiction.

The central issues were whether the reformulated claim fell within the tort or property gateways and whether declarations untethered to an enforceable right had a reasonable prospect of success.

1. Appeal dismissed. The Court of Appeal unanimously permitted the proposed amendments because they raised pure points of law on the existing facts and evidence. The amendments did not, however, establish jurisdiction or a viable claim.

2. Article 7(2) of the Brussels I Recast Regulation and paragraph 3.1(9) of the relevant service-out practice direction can encompass a claim for a declaration of non-liability in tort. A claim concerning non-infringement of UK patent rights may therefore fall within those provisions. A right not to be injuncted could suffice even if liability for damages remained.

   The declarations actually sought were not declarations of non-liability for patent infringement. They concerned the terms of a hypothetical licence, while the appellants asserted no enforceable right to receive that licence. The possibility that licensed conduct would not infringe did not transform the claim into one concerning liability in tort. The tort ground therefore failed.

3. UK designations of European patents are property within the jurisdiction for paragraph 3.1(11). If an implementer asserted an enforceable right to a FRAND licence of UK standard-essential patents, the claim could relate wholly or principally to that UK property. This would remain so even if a FRAND licence necessarily covered foreign patents and the UK patents represented only a small part of the portfolio.

   The gateway nevertheless presupposes a legal claim concerning a right of some kind. Here, the appellants relied only on the court’s inherent jurisdiction to make declarations and asserted no underlying right to a FRAND licence. The property gateway was therefore unavailable.

4. The court’s declaratory jurisdiction is not engaged merely because a declaration may serve a useful purpose. The dispute must concern the existence or scope of a legal right, including a possible future right, and there must be a legal standard against which the declaration can be judged. FRAND is not a free-standing legal standard. In earlier FRAND litigation, contractual undertakings to standard-setting bodies supplied the enforceable right and legal framework.

   Even assuming some useful purpose, the proposed claim had no reasonable prospect of success because it was untethered to any legal right. The remaining dependent gateways and forum ground consequently did not arise.

1. Court of Appeal (Civil Division): By [2021] EWCA Civ 440, allowed the procedural amendments but unanimously dismissed the appeal against the jurisdiction order.
2. High Court, Patents Court: HHJ Hacon, sitting as a judge of the High Court, set aside service of the claim form out of the jurisdiction and declared that the court had no jurisdiction to hear the claim.